The Office of Data Protection Commissioner (ODPC) has registered a 75% decline in cases where digital lender apps have abused clients’ information when pestering them to pay up mini-loans they received.
- •The Data Protection Commissioner Immaculate Kassait has acknowledged that loan apps have increasingly refrained from debt shaming tactics after the Central Bank of Kenya (CBK) imposed strict regulations in the sector two years ago.
- •Before the regulations, many digital lenders operated with impunity – disregarding clients’ information and privacy by constantly harassing their friends and family members.
- •When CBK began registering loan apps in 2022, every player in the industry was required to comply with a set of regulations which include data protections for consumers.
The Office of Data Protection Commissioner has also been collaborating with industry lobby group, the Digital Financial Services Association of Kenya (DFSAK) to ensure digital lenders kept consent records and client notices as the law requires. The Commissioner – Immaculate Kassait – signaled that they would not only need advanced technological innovations to proactively protect customers’ data, but also tougher laws to restrain roguish players in the market.
“The practice of debt shaming is nearly eradicated and those who continue to harass customers do so at their own peril,” said DFSAK chairman, Kevin Mutiso.
The CBK has licensed 51 digital lenders to operate in the country while hundreds more still have pending applications. According to DFSAK, digital lenders process more than Ksh. 10 billion every month and serve millions of customers.
In September 2023, the ODPC fined KeCredit and Faircash KSh 9.3 million for abusing customers’ data. Still, there are concerns that for highly profitable digital lenders, such fines are still lenient and insignificant.
Digital lenders, mainly unregulated, have also trapped millions of individuals globally in a cycle of debt with predatory rates. In February this year, Google delisted more than 4,000 loan apps from Playstore which were considered predatory. The Indian government sanctioned a similar crackdown on unregulated apps last year December after an outcry in the country that loan apps were blackmailing individuals to a point of distress.
